A few weeks ago we covered a very important tax resource for those who have purchased or built a new home recently. The New Housing Rebate is a great way to recoup some of the money spent doing either of these things, but there are some things you need to know. Today we talk New Housing Rebate requirements.
First things first. Purchasing a pre-owned home is not covered here. Only newly built homes, whether owner built or builder constructed, are included. This is primarily because resale homes are not subject to the same taxation as newly built homes.
Additionally, the CRA distinguishes between an ‘owner-built’ house and a house purchased from a builder – and the forms required for each are different.
An ‘owner-built’ home is categorized as one of the following:
- A house on land that you already owned, built either by you or a builder you hired.
- A home you’ve substantially renovated, either on your own or through a contractor. At least 90% of the interior must be removed or replaced to count as a substantial renovation.
- A major addition made to your existing home that at least doubles the size of the living area – for example, the addition of a full second level to an existing bungalow.
- The conversion of a non-residential property into your house.
Additionally, you may qualify under an owner-built home that you purchased from a builder if you:
- Purchased a new or substantially renovated house from a builder.
- Purchased a new or substantially renovated home from the builder where you leased the land from the builder.
What properties are covered by this rebate? A home, for the purposes of the New Housing Rebate, includes a detached or semi-detached single-unit house, a duplex, condominium unit, townhouse, a unit in a co-operative housing corporation, a mobile home (including a modular home) and a floating home.
How much are we talking? The amount depends on a few things. As far as a federal rebate, you can expect up to $6300, although that amount will decrease if your house is valued at more than $350,000, and disappears entirely if your property is worth $450,000 or more after the building or renovation. If you can’t claim the full federal rebate, you may also be eligible for a provincial rebate. For example, Ontario offers rebates that can be as high as $24,000, so it definitely worth looking into.
The New Housing Rebate is a great way to get some of the money spent on your new home back, so take advantage and look at what is needed in order to file and qualify. You can find the forms here: http://www.cra-arc.gc.ca/E/pub/gp/rc4028/README.html.
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